NATURAL HEDGING IN LONG-TERM CARE INSURANCE

2017 ◽  
Vol 48 (1) ◽  
pp. 233-274 ◽  
Author(s):  
Susanna Levantesi ◽  
Massimiliano Menzietti

AbstractWe investigate the application of natural hedging strategies for long-term care (LTC) insurers by diversifying both longevity and disability risks affecting LTC annuities. We propose two approaches to natural hedging: one built on a multivariate duration, the other on the Conditional Value-at-Risk minimization of the unexpected loss. Both the approaches are extended to the LTC insurance using a multiple state framework. In order to represent the future evolution of mortality and disability transition probabilities, we use the stochastic model of Cairns et al. (2009) with cohort effect under parameter uncertainty through a semi-parametric bootstrap procedure. We calculate the optimal level of a product mix and measure the effectiveness provided by the interaction of LTC stand alone, deferred annuity and whole-life insurance. We compare the results obtained by the two approaches and find that a natural hedging strategy for LTC insurers is attainable with a product mix of LTC and annuities, but including low proportion of LTC.

2020 ◽  
Vol 4 (Supplement_1) ◽  
pp. 31-31
Author(s):  
Ngee Choon Chia ◽  
Huijun Cynthia Chen

Abstract Singapore has a rapidly aging population. Long-term care (LTC) is one of the largest financial risks facing elderly in Singapore. Singapore implemented Eldershield, a long-term care insurance scheme which provided defined cash benefit payouts in the event of severe disability; but capped at a maximum of six years. Eldershield enrolled people at age 40, but offered an opt-out option. As of 2015, 65% of those aged 40 to 83 opted to be covered by Eldershield, making Singapore as having the highest voluntary LTC insurance rate in the world. This paper uses an actuarial multi-state disability model and calibrates the transition probabilities and duration-of-stay at various health (disability) states to assess the adequacy and comprehensiveness of Eldershield. The time-limited cash benefit design in Eldershield helped defray about 13% of LTC costs. Removing the time cap will help defray 23% and 26% of the LTC costs for elderly male and female respectively. Furthermore, the simulation results demonstrate that relaxing the trigger benefit and having staggered payouts will improve the adequacy of long-term care insurance. The experience of Singapore’s LTC insurance offers insights into the challenges of designing an insurance that tends to occur at higher age and insuring against a cost that could range from zero to a significantly large sum over a long period. Even with the enhanced Careshield Life, which provides cash payouts for life, other policy designs, for example caregiver grants, may be needed to ensure more adequate financing of long-term care.


Risks ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 37
Author(s):  
Manuel L. Esquível ◽  
Gracinda R. Guerreiro ◽  
Matilde C. Oliveira ◽  
Pedro Corte Real

We consider a non-homogeneous continuous time Markov chain model for Long-Term Care with five states: the autonomous state, three dependent states of light, moderate and severe dependence levels and the death state. For a general approach, we allow for non null intensities for all the returns from higher dependence levels to all lesser dependencies in the multi-state model. Using data from the 2015 Portuguese National Network of Continuous Care database, as the main research contribution of this paper, we propose a method to calibrate transition intensities with the one step transition probabilities estimated from data. This allows us to use non-homogeneous continuous time Markov chains for modeling Long-Term Care. We solve numerically the Kolmogorov forward differential equations in order to obtain continuous time transition probabilities. We assess the quality of the calibration using the Portuguese life expectancies. Based on reasonable monthly costs for each dependence state we compute, by Monte Carlo simulation, trajectories of the Markov chain process and derive relevant information for model validation and premium calculation.


2017 ◽  
Vol 3 (1) ◽  
pp. 79 ◽  
Author(s):  
Marten Lagergren ◽  
Noriko Kurube ◽  
Yasuhiko Saito

A simulation model has been developed, which looks at the future state of functional limitations and provision of long-term care from the individual’s point of view and compares the prospects of Japanese and Swedish old persons. The model calculates the distribution on level of functional limitations combined with level of long-term care (LTC) for a 78-year-old man or woman after 3, 6, 9, 12 and 15 years given the initial state expressed in those terms. Longitudinal data for the model has been taken from the Nihon University Japanese Longitudinal Study of Aging (NUJLSOA) study, two waves three years apart, and the Swedish National Study of Aging and Care (SNAC) study, baseline and three-year follow up. Transition probabilities are calculated by relating individual states between waves. Changes over time are then calculated in the model by matrix multiplication using the Markov assumption. The results are in most respects similar for Japan and Sweden. A difference is that institutional care in Sweden is a much more definite stage reflecting differences in end-of-life care policy. Future state and mortality depends to a great degree on the initial state, both in terms of dependency and level of LTC. Thus, 78-year-old people who have no functional dependency and no LTC have a much higher probability of surviving the coming 10–15 years than people of the same age who already are dependent and in need of LTC services. Not a few of the initially independent 78-year-old persons will retain that state even after 15 years. However, the effect of the initial state seems to decrease over time.


2002 ◽  
Vol 16 (1) ◽  
pp. 101-119
Author(s):  
Esther Frostig ◽  
Doron Kliger ◽  
Benny Levikson

Long-term-care (LTC) insurance contracts provide the insured with different benefits for several nursing care levels, for a limited number of benefit eligibility periods. A common assumption in pricing these LTC contracts is that the insured will exercise the right to claim benefits as soon as the eligibility conditions are satisfied. This assumption, however, may contradict the insured's optimization, as it might be worthwhile not to claim when in low care levels and, by doing so, save the option of claiming higher (more expensive) care levels in the future. We term this option of the insured as the deferral option. The consequence of the traditional pricing (i.e., of ignoring the deferral option) is unexpected losses to the insurer. The factors affecting the deferral option's value are the risk of death, the discount factor, the benefit levels of the different care levels, and the transition probabilities between the different care levels.


2020 ◽  
Vol 41 (S1) ◽  
pp. s455-s455
Author(s):  
Ted Herman ◽  
Shelby Francis ◽  
William Dube ◽  
Treyton Krupp ◽  
Scott Fridkin ◽  
...  

Background: The movement of healthcare professionals (HCPs) induces an indirect contact network: touching a patient or the environment in one area, then again elsewhere, can spread healthcare-associated pathogens from 1 patient to another. Thus, understanding HCP movement is vital to calibrating mathematical models of healthcare-associated infections. Because long-term care facilities (LTCFs) are an important locus of transmission and have been understudied relative to hospitals, we developed a system for measuring contact patterns specifically within an LTCF. Methods: To measure HCP movement patterns, we used badges (credit-card–sized, programmable, battery-powered devices with wireless proximity sensors) worn by HCPs and placed in 30 locations for 3 days. Each badge broadcasts a brief message every 8 seconds. When received by other badges within range, the recipients recorded the time, source badge identifier, and signal strength. By fusing the data collected by all badges with a facility map, we estimated when and for how long each HCP was in any of the locations where instruments had been installed. Results: Combining the messages captured by all of our devices, we calculated the dwell time for each job type (eg, nurses, nursing assistants, physical therapists) in different locations (eg, resident rooms, dining areas, nurses stations, hallways, etc). Although dwell times over all job and area types averaged ∼100 seconds, the standard deviation was large (115 seconds), with a mean of maximums by job type of ∼450 seconds. For example, nursing assistants spent substantially more time in resident rooms and transitioned across rooms at a much higher rate. Overall, each distribution exhibits a power-law–like characteristic. By aggregating the data from devices with location data extracted from the floor plan, we were able to produce an explicit trace for each individual (identified only by job type) for each day and to compute cross-table transition probabilities by area for each job type. Conclusions: We developed a portable system for measuring contact patterns in long-term care settings. Our results confirm that frequent interactions between HCPs and LTC residents occur, but they are not uniform across job types or resident locations. The data produced by our system can be used to better calibrate mathematical models of pathogen spread in LTCs. Moreover, our system can be easily and quickly deployed to any healthcare settings to similarly inform outbreak investigations.Funding: NoneDisclosures: Scott Fridkin reports that his spouse receives a consulting fee from the vaccine industry.


2011 ◽  
Vol 16 (1) ◽  
pp. 18-21
Author(s):  
Sara Joffe

In order to best meet the needs of older residents in long-term care settings, clinicians often develop programs designed to streamline and improve care. However, many individuals are reluctant to embrace change. This article will discuss strategies that the speech-language pathologist (SLP) can use to assess and address the source of resistance to new programs and thereby facilitate optimal outcomes.


2001 ◽  
Vol 10 (1) ◽  
pp. 19-24
Author(s):  
Carol Winchester ◽  
Cathy Pelletier ◽  
Pete Johnson

2016 ◽  
Vol 1 (15) ◽  
pp. 64-67
Author(s):  
George Barnes ◽  
Joseph Salemi

The organizational structure of long-term care (LTC) facilities often removes the rehab department from the interdisciplinary work culture, inhibiting the speech-language pathologist's (SLP's) communication with the facility administration and limiting the SLP's influence when implementing clinical programs. The SLP then is unable to change policy or monitor the actions of the care staff. When the SLP asks staff members to follow protocols not yet accepted by facility policy, staff may be unable to respond due to confusing or conflicting protocol. The SLP needs to involve members of the facility administration in the policy-making process in order to create successful clinical programs. The SLP must overcome communication barriers by understanding the needs of the administration to explain how staff compliance with clinical goals improves quality of care, regulatory compliance, and patient-family satisfaction, and has the potential to enhance revenue for the facility. By taking this approach, the SLP has a greater opportunity to increase safety, independence, and quality of life for patients who otherwise may not receive access to the appropriate services.


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